Objective
The ability of financial markets to bear risk is central to economic welfare and stability. Growth and economic wellbeing is inhibited if financial markets are unable to transfer resources efficiently from the suppliers of liquidity to entrepreneurs. However, this proper functioning of financial markets has been distorted by levels of volatility considerably in excess of those implied by fundamentals. Markets have undergone dramatic crashes and they display speculative bubbles with market prices far removed from their equilibrium values. Economic research has hitherto been able to make only limited progress in resolving these important practical and policy relevant issues of the apparent instability in financial markets. This proposal seeks to develop elements of a new paradigm which (i) explicitly takes into account the existence of various forms of heterogeneous, boundedly rational behaviour in financial markets as well as in goods and labour markets, (ii) investigates the potential of such behaviour to generate bubbles, crashes and a system-wide break down of activity as collective outcomes of individual activities, (iii) investigates the linkages and repercussions between the complex area of financial activity and real economic activity which could be affected by e.g. the cancellation of credit lines and a breakdown of expected liquidity provision, (iv) studies how the transmission channel of monetary policy works in times of distress in the financial markets (particularly the interbank market) and how it could restore the credit flow from banks to companies operating in the real sector. We will adopt a methodologically pluralistic approach trying to augment existing macro models and construct new (agent-based) ones from bottom-up. The results will provide insights into the consequences of different modelling paradigms for the conduct of monetary policy, and in particular, appropriate reactions of monetary authorities to prevalent financial distress.
Fields of science (EuroSciVoc)
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: https://op.europa.eu/en/web/eu-vocabularies/euroscivoc.
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: https://op.europa.eu/en/web/eu-vocabularies/euroscivoc.
- social sciences economics and business business and management entrepreneurship
- social sciences economics and business business and management employment
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Programme(s)
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
Topic(s)
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Call for proposal
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
FP7-SSH-2013-2
See other projects for this call
Funding Scheme
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
Coordinator
24118 Kiel
Germany
The total costs incurred by this organisation to participate in the project, including direct and indirect costs. This amount is a subset of the overall project budget.